Energy Stocks Showing Signs of a New Breakout

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Includes: DXI, GMXRQ, MILL, SYNM, WH
by: Rougemont
Several energy-related stocks are showing new signs of a possible breakout to the upside. I prefer fundamental analysis when looking at stocks to buy, but I also think it is important to look at the technical side as well. After doing fundamental analysis, I want to see how a stock looks based on the charts, including what the 50 and 200 day moving averages are, and what the relative strength index is before deciding to buy. When evaluating this data, you can find stocks that appear to be starting what might be a significant new uptrend. One potential sign of this is when the 50 day moving average crosses above the 200 day moving average. This event is called a "Golden Cross Formation" and many view it as a bullish sign. You can read more about the Golden Cross Formation here. While I am selling energy names that have already seen big moves, I still think it makes sense to selectively look for new opportunities in this sector.
These energy and oil stocks have reasonable valuations and strong upside potential. The fact that the charts might be indicating a new uptrend is an added bonus. Here are the companies, most of which have a "Golden Cross Formation" or other bullish signs recently appearing on their chart. Some might just be good for a trade, while others might be interesting longer-term plays. To view the charts for any of these stocks visit finviz.com.
Miller Petroleum, Inc. (NYSE:MILL) shares are trading at $5.26. MILL is an oil and gas drilling and exploration company based in Tennessee. These shares have a 52 week range of $3.97 and $7.67. The 50 day moving average is $5.11, and the 200 day moving average is $5.09.
Fundamentals: Earnings estimates for MILL are for a loss of 23 cents per share in 2011 and a loss of 17 cents for 2012. Book value is stated at $7.28. Miller Petroleum recently announced it will begin trading on the New York Stock Exchange (it currently trades on the NASDAQ) and it will change it's name to Miller Energy Resources. Miller executives will ring the opening bell at the New York Stocks Exchange on April 13. You can read more about these developments here.
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WSP Holdings Ltd. (NYSE:WH) is trading at $1.25. WSP Holdings is a leading maker of steel products and pipes for the oil and gas industry. The 50 day moving average is $1.32 and the 200 day moving average is $1.32. While this stock does not yet have a Golden Cross Formation, it might very soon. These shares are in striking distance of breaking out over the 50 and 200 day moving average of $1.32. Also, the stock has been making higher lows which is another bullish sign.
Fundamentals: WH recently received a huge order for about $91 million which you can see here. A typical quarter in the last few months shows WH booking revenues of about $135 million per quarter, so you can see how significant an order of roughly $91 million will be when WH books it as revenue (probably in Q1). The book value is at $3.40 per share. Another big positive sign and vote of confidence is seeing that Oaktree Capital Management, LP. reportedly owns over 7 million shares in this company, which is nearly 7% of the outstanding shares. You can see them and other major holders listed here.
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GMX Resources, Inc. (GMXR) is trading at $6.14. GMXR is an oil and gas company based in Oklahoma. These shares have a 52 week range of $3.98 and $9.62. The 50 day moving average is $5.29 and the 200 day moving average is $5.23, so the shares are trading well above recent support levels and have just made the Golden Cross Formation.
Fundamentals: Earnings estimates for GMXR are at 19 cents per share in 2011 and 55 cents for 2012. Book value is stated at $4.06. According to Yahoo Finance, GMXR has about $2.4 million in cash and about $285 million in debt. Analysts see a big jump in revenues next year. The revenues estimates are for around $138.5 million in 2011 and about $196 million in 2012. This company holds interests in some high potential areas, including the Niobrara Formation and the Haynesville Formation.
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Syntroleum Corp. (NASDAQ:SYNM) is trading at $2.09. SYNM is based in Oklahoma, and provides synthetic fuels. These shares have a 52 week range of $1.48 and $2.45. The 50 day moving average is $1.89, and the 200 day moving average is $1.82, so these shares are trading about 10% above support levels. It might be good to wait for pullbacks.
Fundamentals: Earnings estimates for SYNM are for break-even results in 2011 and a loss of 4 cents per share for 2012. According to Yahoo Finance, SYNM has about $12.5 million in cash and basically no long term debt. Analysts see a big jump in revenues next year. The revenues estimates are for around $41.6 million in 2011 and about $71.5 million in 2012.
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Dejour Energy, Inc., (DEJ) is trading around 44 cents. DEJ is an oil and gas company based in Canada. These shares have a 52 week range of 28 cents and 53 cents. The 50 day moving average is 36 cents and the 200 day moving average is 33 cents.
Fundamentals: Earnings estimates for DEJ are for a loss of 5 cents in 2011 and a loss of 2 cents per share in 2012. Book value is stated at 38 cents. There is a lot to like about this company. It has an experienced and highly successful management team led by Robert Hodgkinson and it recently announced a joint venture with a NYSE listed company which should lead to more drilling soon. You can read more about the joint venture here.
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The data is sourced from Yahoo Finance and Finviz.com. The information and data is believed to be accurate, but no guarantees or representations are made. Rougemont is not a registered investment advisor and does not provide specific investment advice. The information contained herein is for informational purposes.
Disclosure: I am long WH, DEJ.
Additional disclosure: I may go long GMXR and MILL soon.